Bank payday outages ‘will absolutely happen again’, tech expert says
Payday banking outages will happen again but are unlikely to occur tomorrow, according to a banking technology expert.
Online banking failures on the final Friday of the last two months, payday for many, were seen as millions of customers of different institutions were locked out of accounts or unable to send or receive payments.
At the end of January, Barclays experienced problems in branches and online for days, while in February issues – which did not appear to be related – were encountered by Lloyds, Halifax, Nationwide, TSB, Bank of Scotland and First Direct.
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Similar outages “will absolutely happen again”, said Paul Taylor, chief executive of bank technology company Thought Machine, which sells cloud computing solutions to the banking industry.
Given the attention generated by the last two paydays, Mr Taylor said his guess is this Friday will be safe as every bank’s chief information officer is “super aware” of the day and that “it would be devastating for reputation if anything happened”.
The troubles, however, are not unique to the last two paydays but have just been more visible and complained about, Mr Taylor told Sky News.
“My guess is that we’re talking about visibility, not occurrence. I’m aware of bank problems on paydays for many years.”
Through his job, Mr Taylor said he speaks to a major bank every day and counts Lloyds Banking Group as a client.
Why are glitches happening?
These issues will continue to arise as lenders grapple with “creaking infrastructure”, Mr Taylor said.
“The sheer volume of payments can overwhelm the bank, and that’s why it’s particularly susceptible on this [pay] day”.
“The problem that banks have is that the systems are old and the systems are fragile”, he said.
“One problem causes a knock-on effect, and that knock-on effect ripples through the bank, and then the end result is on payday that the payments don’t get made”.
Solving the issue is expensive and time-consuming, he added, even for banks that have enjoyed higher profits in recent years, thanks to elevated interest rates.
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Could ageing tech be behind banking outages?
Many banks are moving to more modern infrastructure, Mr Taylor said, but it takes time and banks don’t want to get it wrong.
But some are “so entrenched in this legacy technology”, he said.
The UK banks are “not that bad” when compared to international competition and each spend billions on IT every year, Mr Taylor caveated.
Despite this, no banks contacted by Sky News said glitches wouldn’t happen again.
What went wrong on paydays?
And when banks were asked what caused the glitches last payday, none responded with an explanation.
After parts of Barclays were down in January, the phenomenon began being investigated by the influential Treasury Committee of MPs.
As part of this, banks were asked to outline the outages they’ve experienced and why.
In the days before the February payday, nine top UK banks told the committee typical reasons for failures included problems with third-party suppliers, disruption caused by systems changes and internal software malfunctions.
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Those companies had a total of 803 hours of unplanned outages over the last two years, they said, equivalent to 33 days, comprised of 158 individual IT failures.
What have banks said?
TSB and Natwest referred Sky News to the banking lobby group UK Finance, which said it did not know what was behind the past two payday problems.
“The banking industry invests significantly in the resilience of systems and technology,” UK Finance’s managing director of operational resilience David Raw told Sky News.
“The ongoing investment means incidents which cause significant disruption happen very rarely,” he said
“Incidents can be short in duration, but if an issue does arise the bank will always work extremely hard to rectify it as quickly as possible and minimise the customer impact.”
Santander UK said it was not affected by the last two payday outages. “We have robust systems in place to ensure that our services remain operational for customers,” a spokesperson said.
“Since January 2023, our services have been available to customers for 99.9% of the time. When there is a disruption, our priority is to minimise its impact and restore services as quickly as possible and support customers through our alternative channels and ensure that no customer is left out of pocket as a result.”
A spokesperson for HSBC, which also owns First Direct, said: “We continue to invest in our operational resilience to provide the best possible service for our customers”.
“The end of each month brings increased transaction volumes and heightened demand across the banking services industry, and so we plan accordingly – enhancing system capacity as well as limiting non-essential, back-end system changes and updates.”
Nationwide, The Co-operative Bank, Lloyds – who also own the Halifax and Bank of Scotland brands – did not respond to Sky News’s request.
Barclays did not comment.
Rachel Reeves has been urged by a think tank to cut national insurance and increase income tax to create a “level playing field” and protect workers’ pay.
The Resolution Foundation said the chancellor should send a “decisive signal” that she will make “tough decisions” on tax.
Ms Reeves is expected to outline significant tax rises in the upcoming budget in November.
The Resolution Foundation has suggested these changes should include a 2p cut to national insurance as well as a 2p rise in income tax, which Adam Corlett, its principal economist, said “should form part of wider efforts to level the playing field on tax”.
The think tank, which used to be headed by Torsten Bell, a Labour MP who is now a key aide to Ms Reeves and a pensions minister, said the move would help to address “unfairness” in the tax system.
As more people pay income tax than national insurance, including pensioners and landlords, the think tank estimates the switch would go some way in raising the £20bn in tax it thinks would be needed by 2029/2030 to offset increased borrowing costs, flat growth and new spending commitments. Other estimates go as high as £51bn.
Torsten Bell appearing on Sky News
‘Significant tax rises needed’
Another proposal by the think tank would see a gradual lowering of the threshold at which businesses pay VAT from £90,000 to £30,000, as this would help “promote fair competition” and raise £2bn by the end of the decade.
The Resolution Foundation also recommends increasing the tax on dividends, addressing a “worrying” growth in unpaid corporation tax from small businesses, applying a carbon charge to long-haul flights and shipping, and expanding taxation of sugar and salt.
“Policy U-turns, higher borrowing costs and lower productivity growth mean that the chancellor will need to act to avoid borrowing costs rising even further this autumn,” Mr Corlett said.
“Significant tax rises will be needed for the chancellor to send a clear signal that the UK’s public finances are under control.”
He added that while any tax rises are “likely to be painful”, Ms Reeves should do “all she can to avoid loading further pain onto workers’ pay packets”.
The government has repeatedly insisted it will keep its manifesto promise not to raise income tax, national insurance or VAT.
A Treasury spokesperson said in response to the think tank report it does “not comment on speculation around future changes to tax policy”.
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Chancellor urged to freeze alcohol duty
Meanwhile, Ms Reeves has been urged to freeze alcohol duty in the upcoming budget and not increase the rate of excise tax on alcohol until the end of the current parliament.
The Scotch Whisky Association (SWA), UK Spirits Alliance, Welsh Whisky Association, English Whisky Guild and Drinks Ireland said in an open letter that the current regime was “unfair” and has put a “strain” on members who are “struggling”.
The bodies are also urging Ms Reeves “to ensure there will be no further widening of the tax differential between spirits and other alcohol categories”.
A Treasury spokesperson said there will be no export duty, lower licensing fees, reduced tariffs, and a cap on corporation tax to make it easier for British distilleries to thrive.
Leave retailers alone, Reeves told
This comes as the British Retail Consortium (BRC) warned that food inflation will rise and remain above 5% into next year if the retail industry is hit by further tax rises in the November budget.
The BRC voiced concerns that around 4,000 large shops could experience a rise in their business rates if they are included in the government’s new surtax for properties with a rateable value – an estimation of how much it would cost to rent a property for a year – over £500,000, and this could lead to price rises for consumers.
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Latest ONS figures put food inflation at 4.9%, the highest level since 2022/2023.
The Bank of England left the interest rate unchanged last week amid fears that rising food prices were putting mounting pressure on headline inflation.
“The biggest risk to food prices would be to include large shops – including supermarkets – in the new surtax on large properties,” BRC chief executive Helen Dickinson said.
She added: “Removing all shops from the surtax can be done without any cost to the taxpayer, and would demonstrate the chancellor’s commitment to bring down inflation.”
Donald Trump has revealed that media mogul Rupert Murdoch and his son Lachlan could be part of a deal in which TikTok in the United States will come under American control.
The US president also namedropped Michael Dell, the founder and CEO of Dell Technologies, as a possible participant in the deal during an interview with Fox News, which is owned by the Murdochs.
“I think they’re going to be in the group. A couple of others. Really great people, very prominent people,” Mr Trump said. “And they’re also American patriots, you know, they love this country. I think they’re going to do a really good job.”
Mr Trump said that Larry Ellison, founder and CEO of software firm Oracle, was part of the same group. His involvement in the potential TikTok deal had previously been revealed.
President Donald Trump speaking to reporters outside the White House. Pic: AP/Mark Schiefelbein
White House press secretary Karoline Leavitt said on Saturday that Oracle would be responsible for the app’s data and security, with Americans set to control six of the seven seats for a planned TikTok board.
This comes after Mr Trump said he and China’s Xi Jinping held a “very productive call” on Friday, discussing the final approval for the TikTok deal, much of which is still unknown.
Once confirmed, the deal should stop TikTok from being banned in the US after lawmakers decided it posed a security risk to citizens’ data.
Officials warned that the algorithm TikTok uses is vulnerable to manipulation by Chinese authorities, who can use it to push specific content on the social media platform in a way that is difficult to detect.
Congress had ordered the app shut down for American users by January 2025 if its Chinese owner ByteDance didn’t sell its assets in the country – but the ban has been delayed four times by President Trump.
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Mr Trump said on Sunday that he might be “a little prejudiced” about TikTok, after telling reporters on Friday: “I wasn’t a fan of TikTok and then I got to use it and then I became a fan and it helped me win an election in a landslide.”
After the call with Mr Xi, Mr Trump said in a Truth Social post: “We made progress on many very important issues, including Trade, Fentanyl, the need to bring the War between Russia and Ukraine to an end, and the approval of the TikTok Deal.”
Mr Trump later told reporters at the White House that Xi had approved the deal, but said it still needed to be signed.
Representatives for the Murdochs, Mr Dell and Mr Ellison have not yet commented on a potential TikTok deal.
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